WhatsApp is everything wrong with America
This originally appeared on Robert Reich’s blog.
If you ever wonder what’s fueling America’s staggering inequality, ponder Facebook’s acquisition of the mobile messaging company WhatsApp.
According to news reports today, Facebook has agreed to buy WhatsApp for $19 billion.
That’s the highest price paid for a start-up in history. It’s $3 billion more than Facebook raised when it was first listed, and more than twice what Microsoft paid for Skype.
(To be precise, $12 billion of the $19 billion will be in the form of shares in Facebook, $4 billion will be in cash, and $3 billion in restricted stock to WhatsApp staff, which will vest in four years.)
Given that gargantuan amount, you might think Whatsapp is a big company. You’d be wrong. It has 55 employees, including its two young founders, Jan Koum and Brian Acton.
Whatsapp’s value doesn’t come from making anything. It doesn’t need a large organization to distribute its services or implement its strategy.
It value comes instead from two other things that require only a handful of people. First is its technology — a simple but powerful app that allows users to send and receive text, image, audio and video messages through the Internet.
The second is its network effect: The more people use it, the more other people want and need to use it in order to be connected. To that extent, it’s like Facebook — driven by connectivity.
WhatsApp’s worldwide usage has more than doubled in the past nine months, to 450 million people — and it’s growing by around a million users every day. On December 31, 2013, it handled 54 billion messages (making its service more popular than Twitter, now valued at about $30 billion.)
How does it make money? The first year of usage is free. After that, customers pay a small fee. At the scale it’s already achieved, even a small fee generates big bucks. And if it gets into advertising it could reach more eyeballs than any other medium in history. It already has a database that could be mined in ways that reveal huge amounts of information about a significant percentage of the world’s population.
The winners here are truly big winners. WhatsApp’s fifty-five employees are now enormously rich. Its two founders are now billionaires. And the partners of the venture capital firm that financed it have also reaped a fortune.
And the rest of us? We’re winners in the sense that we have an even more efficient way to connect with each other.
But we’re not getting more jobs.
In the emerging economy, there’s no longer any correlation between the size of a customer base and the number of employees necessary to serve them. In fact, the combination of digital technologies with huge network effects is pushing the ratio of employees to customers to new lows (WhatsApp’s 55 employees are all its 450 million customers need).
Meanwhile, the ranks of postal workers, call-center operators, telephone installers, the people who lay and service miles of cable, and the millions of other communication workers, are dwindling — just as retail workers are succumbing to Amazon, office clerks and secretaries to Microsoft, and librarians and encyclopedia editors to Google.
Productivity keeps growing, as do corporate profits. But jobs and wages are not growing. Unless we figure out how to bring all of them back into line – or spread the gains more widely – our economy cannot generate enough demand to sustain itself, and our society cannot maintain enough cohesion to keep us together
WhatsApp is everything wrong with the U.S. economy
A very interesting observation from a very intelligent man. Do you think this is a true observation of reality? Please post your comments below.
Robert Reich: WhatsApp is everything wrong with the U.S. economy a href=”http://zite.to/1gVWSxP”http://zite.to/1gVWSxP/a
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GREYHOUND DEATHS REVEALED FOR DECADES, FLORIDA’S GREYHOUND RACING INDUSTRY DID NOT HAVE TO REPORT DOG DEATHS. NOW THE NUMBERS ARE PUBLIC.
TALLAHASSEE — Penrose Jake, a fawn-colored greyhound, was known for being “tight on the rail” with an “explosive finish.” But after starting strong in the 550-yard race at the Orange Park Kennel Club last August, the dog faded, slammed into another dog, and finished last.
Within hours, 3-year-old Pen-rose Jake was pronounced dead. He had run a career 127 races, 42 of them in his last year.
The official death report said he died “after the eighth race” of the Jacksonville track’s evening lineup on Aug. 21, 2013. A race video recorded his final competition. No other information was provided.
The death of a greyhound like Penrose Jake would have normally gone unreported in Florida. But track operators are now required to notify the state within 18 hours of a greyhound’s death at a track or racing kennel in Florida. Approved by lawmakers in 2010, the rules didn’t take effect until last spring — more than 80 years after dog racing became legal in Florida — a testament to the greyhound racing industry’s power and influence in Tallahassee.
According to death reports reviewed by the Herald/Times, 74 dogs died on racetrack property between May 31 and Dec. 31, 2013
— one every three days.
Unlike other states, Florida’s greyhound industry does not have to report injuries. And, although some death reports provide detailed information, many do not. Among the deaths:
› WS Mellow Yellow, a 2-year-old, died July 15 “while being hauled from Alabama” to the Sanford Orlando Kennel Club.
› GM’s Tiny Momma fractured his left front leg during the 14th matinee race at the Daytona Beach Kennel Club on Oct. 26. “The injury was of a nature that required the track veterinarian Dr. Kevin Eastman to euthanize the greyhound after his post-race examination,” the report said.
› Year-old TD’s Harley died July 16 after he collided with the fence on the first turn and finished last at St. Petersburg’s Derby Lane.
› At the Washington County Kennel Club, a 2-year-old male named Flying Meteorite was “cooled down” after a race on June 8 but was still panting heavily. Inspectors concluded: “He died when he was put back in his kennel.”
Other death reports raise questions about the care and treatment of the animals.
A dog named Hallo Spice Key died Sept. 3 after being sprinted — running before a race — at 5:45 a.m. at the Jacksonville compound by a helper for the James “Barney” O’Donnell kennel. “It appears the death could have been prevented had the greyhound not been sprinted in the dark,” the report said.
A day later at the Pensacola Greyhound track, Tempo Man Eater, a1-year-old female, died sometime in the middle of the day after being taken out of her crate for exercise. She had not been eating for four days, the report said, so the trainers had tried to force-feed her.
And on Dec. 5, a puppy who hadn’t been named yet arrived at the St. Petersburg Kennel Club in bad shape. “We lost a new pup today. He just came off the hauler on Thursday,” the track reported. “Trainer said Dr. Gregory was going to do a necropsy, but the Dr. thought it was head trauma.”
According to the death notices reviewed by Grey2K, a Massachusetts-based advocacy group committed to ending greyhound racing, a total of 31 greyhounds died or were euthanized for racing-related reasons — from injuries, suspected heatstroke and unknown causes. Another 17 deaths appeared to be racing-related, based on the comments that the dogs fell, collided or were hit during the race.
The state is collecting the information and will take appropriate action if necessary, said Department of Business and Professional Regulation spokeswoman Tajiana Ancora-Brown. But, for now, the agency is in education mode about the new rule and is not prepared to crack down on any perceived abuses.
“The department has gone over and above what is expected to try to communicate with the licensees,” she said. “After we feel we have exhausted those efforts, there will be action taken to comply with the rule.”
The most deaths over the seven-month reporting period occurred at Derby Lane in St. Petersburg and the Daytona Beach Kennel Club, with12 each. At Flagler racetrack in Miami, six dogs died. Mardi Gras Racetrack and Casino in Hallandale Beach has reported no deaths since the start of its five-month racing season, which began in December. And at Bonita Springs, the greyhound track between Naples and Fort Myers, there were two reported deaths.
Animal welfare advocates assert there is a direct relationship between the level of transparency about the greyhound industry and animal welfare.
“In the states where we have passed greyhound injury reporting laws, the number of dogs euthanized has declined significantly,” said Carey Theil, executive director of Grey2K. “In Massachusetts the number of greyhounds that were killed dropped by 43 percent in the first year after passage of an injury reporting law.”
He said the Tempo Man Eater case, in which trainers attempted to force feed a sick dog, would be handled much more aggressively in other states where the license of the trainer, owner and racetrack is at stake. “But in Florida, no one is held accountable when a dog is abused and dies — no one,” he said.
At Mardi Gras Racetrack in Hallandale Beach, track veterinarian Mel Stein, 83 and semi-retired, said he sees the pragmatics of business decisions come into play every day when it comes to caring for race dogs and believes most race dogs are treated well.
“Ninety-nine percent are not abused,” he said. “The way they treat greyhounds is the way some people treat children. There are great trainers and there are others who abuse them — I don’t know which ones — but there are some who do, and it’s a way of making a living.”
The Florida Greyhound Association, which represents dog owners and trainers, says track owners who fail to invest in improvements on their tracks are to blame for many of the dog injuries and deaths. The association opposes expanding the death reporting rule to mandatory injury reporting.
“If there are injuries going on, let’s stop them right now, stop them before they happen — not report them after they happen,” said Jack Cory, the Florida Greyhound Association’s lobbyist. He wants the state to require track owners to invest in their tracks to attract more fans and to make the conditions safer for dogs.
Among Cory’s suggestions: Require tracks to cover the 240-volt electrical wires that line the inner circle of the track, install a breakaway arm to protect dogs from injury when they go the wrong way and improve the track surface.
“When those three elements are implemented we will agree to an injury report,” he said. Until then, he said, “injury reporting is a political tool” by animal rights activists that “want to kill live greyhound racing.”
Florida is home to13 of the last remaining 21 greyhound tracks in the nation. But what is left of the industry is losing its appeal as younger people opt for the lure of electronic games on slot machines.
Since 1990, the total money waged for the 13 facilities that ran greyhound racing in Florida has fallen by 67 percent — from $933.8 million to $265.4 million in 2012, according to the Spectrum Gaming Group, a New Jersey-based research firm hired by lawmakers to assess the economic effects and social costs of expanded gambling in Florida. As attendance dropped, profits have also plummeted. The industry lost $35 million in 2012 on dog racing, Spectrum said.
Ann Church, vice president for state affairs for the ASPCA, which is working to end greyhound racing in the United States, said the industry’s declining profits are taking their toll on the dogs.
“We realize the economics are such that, in order to make a profit, you have to get rid of anything that is humane — housing, vet care and food,” she said.
When the movement began 20 years ago, animal rights activists didn’t call for an end to dog racing, just a change in the practices, Church said. Today, she said, trainers and handlers are not well paid and conditions are so inhumane that animals suffer.
Florida’s greyhound tracks are caught in a legislative bind. Despite their decline in popularity, dog tracks in Florida have barely reduced the number of greyhound races since 1996 because of a state law known as the 90 percent rule. The rule permits tracks to add poker tables so long as they continue no fewer than 90 percent of the live races they were running in 1996.
Since the 1990s, attendance has declined and people have spent less money betting on dogs, but the industry has had to run the same number of races, said Isadore Havenick, owner of the dog tracks in Miami, Naples and the Magic City Casino. His family has run racetracks for nearly six decades and, while he does not want to stop racing, he wants to scale it back dramatically.
Because Bonita Springs track in Naples had the most robust racing schedule when the rule was adopted, it is required to run 410 schedules of eight race cards each a year. He said the track lost $2.5 million last year on the operation. The lost money was mostly — but not entirely — offset by the more lucrative poker room.
“Nobody wants to do anything 410 times a year,” Havenick said. “There would be more money to invest into the track if we weren’t losing as much as we were in dog racing in its current form.”
Now track owners have joined in an unexpected alliance with their animal rights critics. Together, they want legislators to reduce the number of required races while allowing them to keep other gambling operations. A massive rewrite of the state’s gambling laws expected to be released next week in the state Senate is likely to include reduced racing requirements, supporters say, and bills to require injury reporting have been filed in both the House and Senate.
Cory, the Florida Greyhound Association lobbyist, says that reducing the number of races will endanger 8,000 dogs, cause 3,000 jobs to be lost and cost the state economy about $50 million. He said the track owners are making millions in profits off inter-track wagering that the state does not track or tax and that more than offsets their other losses.
Grey2K’s Theil says the greyhound association’s opposition to more detailed reporting about dog injuries is a signal that they have something to hide.
“They do not want the public to have information about the way their industry operates because at some level, they understand if the public has information, there will be a lot of public opposition to them,” he said. “The industry is very powerful.”
Since 1996, kennel operators and greyhound tracks have given more than $1 million to individual candidates running for statewide office or the Legislature, according to a Herald/Times analysis.
But the industry’s real investment was in donations to the Republican and Democratic parties and political committees. Nearly $9 million was spent on campaign contributions in the past 18 years — with close to half of the money spent by South Florida dog tracks to win voter approval in 2004 for slot machines at horse tracks, dog tracks and jaialai frontons in South Florida.
But since voters approved the 2004 referendum, track owners have spent more than $4 million trying to influence legislators.
Said the ASPCA’s Church: “It’s outrageous that it has taken this long to get to this point. The difference between now and 10 years ago is [that] the profit has gone out of it and racetracks now see no benefit to run the races so they want out of it as well.”
Mary Ellen Klas can be reached at meklas@MiamiHerald.com . Follow her on Twitter @MaryEllenKlas
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